Pricing Behavior:

a. When out shopping for Thanksgiving dinner, you notice that the local grocery store has a sale on turkeys. Why might the store sell turkeys at a lower price right at the time when the demand for turkeys increased? Briefly explain. (Hint: Treat this as a pricing question, not a supply and demand question.)

b. Most cable systems offer different bundles of communications services such as phone, internet and TV where purchasing two or three of the services as a bundle is less costly than purchasing the products separately. Briefly explain why this is done.

c. Airlines are well known for charging different prices for different tickets both on the same flights and to the same locations. According to the United Airlines (UA)Contract for Carriage, passengers must follow the following rules (among many others):

Fares apply for travel only between the points for which they are published. Tickets may not be purchased and used at fare(s) from an initial departure point on the Ticket which is before the Passenger's actual point of origin of travel, or to a more distant point(s) than the Passenger's actual destination being traveled even when the purchase and use of such Tickets would produce a lower fare. This practice is known as "Hidden Cities Ticketing" or "Point Beyond Ticketing" and is prohibited by UA.

The purchase and use of round-trip Tickets for the purpose of one-way travel only, known as "Throwaway Ticketing" is prohibited by UA.

The use of Flight Coupons from two or more different Tickets issued at round trip fares for the purpose of circumventing applicable tariff rules (such as advance purchase/minimum stay requirements) commonly referred to as "Back-to-Back Ticketing" is prohibited by UA.

The failure to comply with applicable stayover requirements, the failure to meet the purpose or status requirement associated with the Ticket's fare category, and the purchase or use of a Ticket that UA determines circumvents the applicable fare rules.

Failure to comply with these rules may result in additional charges, cancelation of ticket or even permanent banning from the airline. Explain what conditions are necessary for United (and other airlines) to charge different prices as opposed to a single market price. As part of your answer, explain why United would impose the types of rules cited above. (This is not a legal question; it is a question about the economics of pricing.)

d. Suppose an electric utility has three types of customers: residential, commercial, and industrial. The utility proposes to charge three different prices for each type. What are the potential benefits to consumers from this pricing approach? The utility? What information might you look at to determine if those benefits are occurring?